With registration now open for the next academic year, and the start of exam period, take five minutes to learn about how study majors in Israel are (or aren’t) relevant to Israel’s labor market, and which population groups are affected the most by this phenomenon

We’ve reached that time of year when students are hunkering down to study for finals and wondering how much all of the hard work they are putting into their academic studies will pay off. At the same time, a new batch of potential students are gearing up to start their academic journeys and, in the process, deciding which path to pursue.

“Study hard and you will succeed.” We always say it and yet this statement doesn’t necessarily ring true. Despite the high share of Israelis who hold an academic degree, there seems to be a misalignment in Israel between the composition of human capital and the needs of the labor market, at least among certain population groups.

What does that mean, exactly?

It means that many students are pursuing degrees in fields where demand for more workers is relatively low and, on the flipside, not enough students are pursuing degrees in certain fields where more workers are needed.

Demand and supply surveys by the Central Bureau of Statistics show that, as of 2016, there was a relative abundance of workers in certain professions and a degree of difficulty recruiting workers in other industries. This is evident in the ratio of employment seekers to job vacancies in the various occupations.

For example, among agents in business, management, law, welfare, and culture there are 3.7 employment seekers for every available job, as opposed to 0.7 workers for every available job for academic professionals in science, engineering, and information and communication technologies. Thus, there are not enough workers to fill the positions available in the latter category.

As described by researcher Gilad Brand: “the advanced industries already face limitations in the supply of workers – that is, the workers who have the required skills are already employed in the sector.”

Taub Center research over the past few years has shown that this misalignment is particularly pronounced among some of Israel’s weakest population groups: particularly, Haredi (ultra-Orthodox) men and Arab Israeli women.

Haredi men are particularly affected by these trends because they study fields that already have a large excess of workers. When comparing the study majors of male Haredi degree holders with those of secular Israeli men, we find that about 40% of male Haredi academics earned degrees in law and business administration, versus about 27% of secular Jewish men with a degree.

In contrast, the situation is reversed when looking at science-related subjects (engineering and architecture, mathematics and computer science) — 34% of secular male academics hold degrees in those fields, versus almost 25% of Haredi degree holders.

This phenomenon is connected to place of study as well. More than half of male Haredi students are enrolled in private colleges, where a higher percentage of students pursue these already-saturated fields than students do when enrolled in public colleges.

In public colleges, 52% of Haredi male students study engineering and architecture; 16% study math and computer sciences; 13% study business administration; and, 11% study social sciences. In private colleges, on the other hand, the vast majority of male students study law or business administration – 50% and 43%, respectively.

A similar misalignment is seen among Arab Israeli women. The share of Arab Israeli women studying in academic institutions has increased greatly, especially among Bedouin and Druze women – an increase of nearly 50% between 2008 and 2013. However, a high share of Arab Israeli women (42% of Muslim and 46% of Bedouin women) pursue degrees in the field of education, as compared with 16% of non-Haredi female Jewish academics.

This is surprising given the fact that Arab Israeli girls in high school study in science and engineering tracks at higher rates than Arab Israeli boys or Jewish girls. Nonetheless, by college this trend reverses and a smaller percentage of Arab Israeli women study science or engineering than non-Haredi Jewish women.

Not only do a large portion of women study education, but female Arab Israeli women with degrees in other fields also end up working in education, meaning that an even larger percentage of Arab Israeli women are pursuing careers in a field in which the market is saturated. According to researcher Hadas Fuchs: “it is worth considering more extensive measures, such as guiding high school pupils to consider higher education in fields that are ‘in-demand’ and encouraging other employment possibilities.”

It is important for graduates in Israel to be aware of the skills that are in demand in Israel’s labor market and fields in which it is more competitive to get a job. When popular fields of study in higher education and the needs of the labor market do not align, it is difficult for workers to adjust their skills. This can result in challenges for Israel’s productivity and economic growth and can also contribute to widening wage gaps between sectors, already among the highest in the West.

It should be noted that there has been much improvement in recent years in higher education enrollment among both Haredi men and Arab Israeli women – a very positive trend toward more meaningful integration in the labor market. However, the real test lies in how to guide students – especially those from weaker population groups – towards these “in-demand” fields in the labor market, which offer more employment possibilities and higher wages.